Tax Authorities and Solution Providers Meet Up for 11th Tax Stamp & Traceability Forum

A number of key themes emerged from the presentations, panel discussion, and workshops at the recent Tax Stamp & Traceability Forum™ (TSTF) held in October, in Tbilisi, Georgia.

TSTF remains the only event of its kind to bring together government excise and customs agencies, tax experts, tobacco control bodies, cigarette and alcohol manufacturers, security printers, suppliers of authentication and serialisation technol- ogies, and systems integrators, to discuss latest developments in the tax stamp and traceability domain.

ISO standard

One theme discussed at length this year was the current review of the tax stamp ISO standard 22382, which had its own pre-conference workshop. Ian Lancaster, Project Leader for the ISO review, led the workshop, with the intention of gathering attendees’ inputs on what should be changed, taken out of, or added to the standard, which was originally published in 2018. One suggestion was that 22382 should include more recommendations related to track and trace systems, given that such systems are increasingly associated with tax stamp programmes.

Tobacco track and trace

Another theme was the implementation of the track and trace system and global information sharing point mandated under the WHO FCTC Protocol to Eliminate Illicit Trade in Tobacco Products. There are currently 68 parties to the Protocol and most of them should have implemented track and trace by September 2023 – which is unfortunately not the case, as Luk Joossens from Smoke Free Partnership pointed out in his presentation on the global status of implementation of the Protocol.

Still on the subject of the Protocol, the International Tax Stamp Association (ITSA) held a pre-conference seminar for revenue authorities and ITSA members, where it used two real-case examples to demonstrate how countries with tax stamp programmes already in place could use these programmes to exchange track and trace data in line with Protocol requirements. One key point raised during the seminar was that not enough countries were extending their tax stamp programmes to include export products, with the result that these unmarked, unmonitored products could be easily diverted to illicit channels.

What really happens in the field?

Another key topic looked at what really happens in the field in terms of tax stamp inspection. Francisco Mandiola of FMA Secure was joined by Ghana, Mauritius and Panama revenue authorities to talk about their countries’ on-the-ground experiences.

The panel addressed questions such as: are smartphones used as much as we think they are to scan barcodes on tax stamps, or do inspectors rather rely on specialised readers? And do inspectors ever use optical features such as holograms to authenticate tax stamps and products? Or maybe they don’t use any of these techniques at all, and rather rely on other methods to weed out acts of non- compliance and illicit trade.

Direct marking and 2D barcodes

High on the agenda as well was the use of secure direct marking programmes on beverages. A number of presenters described how beer is one of the most common product categories subject to excise duties, along with non-alcoholic beverages, such as soft drinks and bottled water. However, using paper-based tax stamps for these products poses several operational challenges:

• The products are less expensive than luxury goods such as tobacco and spirits. This makes manufacturers more price-sensitive and requires an optimised project cost.

• Production line speeds are faster and labelling products may reduce line performance.

• Product shapes and colours differ widely and adding labels to the same production line is challenging.

The presenters described how these challenges could be addressed with a fiscal marking and track and trace solution that prints unique 2D barcodes directly on the bottle or can, using security inks to protect against fake and duplicated codes. Such a solution also opens the door to other applications such as returnable bottles management and inventory tracking.

Still on the topic of 2D barcodes, another speaker described how the introduction of health passes during the COVID-19 pandemic had popularised the use of 2D barcodes and that the upcoming implementation of GS1 Digital Link would further accelerate this trend. The EU, meanwhile, will progressively implement the Digital Product Passport, encouraging smartphone users to interpret 2D codes on products and components across various sectors.

However, simply scanning a 2D code can lead to significant damage due to substitution fraud. Numerous testimonies have highlighted the potential risks, ranging from identity theft to compromised bank account access. It is, therefore, essential to develop solutions that serve as a safety net that protects citizens when scanning a seemingly legitimate 2D code – since that code could actually be carrying a malicious link.

Where is the QC love?

Another speaker asked why quality control (QC) does not get the love it deserves in the world of tax stamps. In this field, precision and quality are of the utmost importance, so putting QC front and centre is vital.

State-of-the-art QC solutions don’t only ensure that all print features are present, in the correct position, and without flaws, they also create special reports and data files. This data can be used to improve production, reduce waste, avoid future issues, and track the stamps through the finishing and packing process. The data files can become the basis of a unique and reliable track and trace solution.

Country cases

The conference also covered a wide range of country case studies, including recreational cannabis legalisation in Canada, Lebanon’s new tobacco authentication and traceability programme, insights from implementing tax stamps across the countries of the Gulf Cooperation Council, and the extensive tax stamp and direct marking system used by the conference hosts, Georgia Revenue Service.

The next TSTF will take place in early 2025 in Cape Town, South Africa, marking the second time the event has been held on the African continent.